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Tuesday, December 13, 2011

Save Money With Energy Efficient Window Coverings

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Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®

Friday, December 9, 2011

Homes Are Selling Across The Country, and Here's Why...

Homes Are Selling Across The Country, and Here's Why...

We started to see problems with transactions as early as July 2005, but prices continued to climb until about February 2006 in South Florida, which essentially represents the peak in our market.  According to Case Shiller, this is where average prices are now in proportion to then.  With affordability at an all time high due to home prices and low interest rates, whoever isn't convinced that now is the best time in recent history to buy a home is allowing the media to steal away your greatest opportunity for homeownership.



Thursday, December 8, 2011

Common Sense Isn’t Common Practice

It used to be that there was logic applied in the world of mortgage lending. An appraiser determined the value of a home by the axiom, “what a reasonable buyer would pay a reasonable seller”. An underwriter weighed the plusses and minuses of a file (after analyzing the income, the assets, the credit profile and the appraisal) and made a judgment call based on their experience.

Loans with sizable down payments used to be more flexible with how income was documented or what quality of credit was required. Even the decision of what made up “good credit” has been reduced to a FICO score. Determining the risk of a loan affected its approval or denial. Further, loans deemed riskier were given less favorable terms (higher rates and/or costs or larger down payments).

But today, everyone has tried to quantify everything and put everything into a matrix. Credit scores are numerical, and the number determines eligibility and cost. Gone is the concept of explaining why you have defects in your credit. We don’t care why, we just look at your score. Appraisers now are being scored and their data being scrutinized to a level most would find mind-boggling. Amenities that make a home worth more for a particular buyer (like a pool or upgraded basement) are virtually ignored. Underwriters have primarily become fact-checkers and quality control as a computer software program underwrites the vast majority of mortgages today.

Gone is common sense. It has been replaced by numerical formulas and a cover-my-behind, justify-everything-with-data mentality. Basically, the pendulum has swung too far. It used to be that lending was too easy (see the subprime debacle), but now we have eliminated too much of the human element. We need common sense back.

People who have saved 30% for a down payment know what they can afford monthly. Don’t they?

People who had a medical challenge two years ago that is not likely to reappear should not have a twenty year credit history destroyed. Should they?

People aren’t likely to overpay for a home with so much inventory and all the media exposure about falling prices. Are they?

Bring back some common sense when we need it most!

Tuesday, December 6, 2011

Real Estate As a Hedge Against Inflation (from KCMBlog.com)

Real Estate as a Hedge against Inflation



We haven’t heard a lot about inflation recently. However, prices have started to creep upward over the last year. As examples, here are a few categories that increased from November 2010 to November 2011:
  • Food at home – up 6.2%
  • Housing fuels and utilities – up 3.5%
  • Transportation – up 9.2%
Today, we want to address the issue of inflation and the advantages of owning real estate. The National Association of Realtors (NAR) took an historic look at the impact of inflation. Here are some inflation numbers over the past 30 years:
We can see that real estate has fared very well. The most important number is the $0 increase in mortgage amount. The study assumed that the homeowner took a 30 year fixed rate mortgage thereby locking in the housing expense for the thirty years.
NAR then looked at inflation moving forward over the next thirty years. Obviously, if it remained the same as the last thirty years the percentage increase would be the same. They looked at a low inflation scenario and a high inflation scenario. The graph below shows the findings:

Bottom Line

We can lock in the housing costs of our primary residences and vacation homes at all time lows if we purchase today. Either would be a great hedge against future inflation.

Tuesday, November 29, 2011

Who says Homes aren't selling?

Home Sales Increase Across the Country
The National Association of Realtors recently released their 2011 3rd Quarter Housing Report. In the report, they showed that combined sales of single family homes, condos and co-ops increased in EVERY state as compared to the 3rd quarter of last year. Here are the state-by-state numbers.
The next time someone says houses aren’t selling, ask them which state they live in and show them the chart.

Wednesday, November 9, 2011

Homeownership, As American as Baseball and Apple Pie and Baseball!

Americans Still Believe in the Value of Homeownership



Last week, Fannie Mae released their National Housing Survey for the third quarter of 2011. They survey the American public on a multitude of questions concerning today’s housing market. Each quarter, we like to pull out some of the findings we deem most interesting. Here they are for the most recent report:

Most Important Reasons to Buy a Home

The study shows that the four major reasons a person buys a home have nothing to do with money. The top four reasons, in order, are:
  • It means having a good place to raise children and provide them with a good education
  • You have a physical structure where you and your family feel safe
  • It allows you to have more space for your family
  • It gives you control of what you do with your living space (renovations and updates)
When we talk about homeownership today, it seems that the financial aspects always jump to the front of the discussion. There is no doubt that families must justify a home purchase from a financial point of view today. However, the reasons they actually buy are the same reasons our parents and grandparents purchased their home – to create a better lifestyle for their families.

The Home as an Investment

Though most people purchase a home for non-financial reasons, everyone realizes there is a money component to homeownership. Here is what they said on this issue:
  • 64% of the general population (and 69% of homeowners) believe that homeownership is a ‘safe’ investment.
  • 55% believe that homeownership has more potential as an investment than any other traditional asset class.
  • 68% think that now is a good time to buy a home

Rent vs. Buy

We are always interested in the difference people see in renting vs. owning.
  • 63% of renters have aspirations to someday own their own home
  • 70% of renters think that owning is superior to renting
  • 96% of homeowners see homeownership as a positive experience (4% see it as a negative experience) while 83% of renters see renting as a positive experience (15% see it as a negative experience)
  • 97% of homeowners live in a single family residence while 53% of renters live in a multi-unit building

Bottom Line

Even in these difficult times, Americans still realize the value of homeownership both from a financial and social standpoint.

Tuesday, November 8, 2011

The Ship Appears to be Turning

The Ship Appears to be Turning

Today, we are again honored to have Ken H. Johnson, Ph.D. — Florida International University (FIU) and Editor of the Journal of Housing Research as our guest blogger. To view other research from FIU, visit http://realestate.fiu.edu/. Dr. Johnson will also be speaking at NAR’s Conference and Expo in Anaheim later this week. For more information click here. - The KCM Crew

On October 31, CNN Money reported: “Home prices headed for triple dip”.  Reporting on information provided by Fiserv (a financial analytics company), a 3.6% fall in prices on a national basis is expected by next summer.  This will result in the Case-Shiller Home Price Index falling to 35% below its peak in 2006 and marking a triple dip in U.S. housing markets.[1]

Say it ain’t so!  Is housing set for a third dip in five years?  This depend on factors being in place to lessen the impact from market anxiety brought on by worries over a pending wave of foreclosures and the U.S. debt crisis, which we will start to hear more about shortly.

So, what are these factors and what do they tell us?  These factors are really fundamental drivers that encourage individuals to buy versus rent their personal residences.  They are sometimes referred to as housing affordability measures.  The price to income, mortgage payment to income, and a buy versus rent analysis for various markets provide strong evidence that factors are in place to encourage home ownership or favor renting depending on the resulting measurements.  In ongoing research being performed by Beracha and Johnson, these measures are at record levels in favor of buying.[2]  In fact, the price to income ratios in 23 of the 50 states are at 30-year record lows.  The payment to income ratios are at 30-year record low in all 50 states.  A buy versus rent analysis performed in 23 of the nation’s largest metropolitan areas also indicates that hurdle rates (the rates at which potential buyers are indifferent between buying and renting) in all 23 cities are below 25-year average appreciation rates.  All of these results strongly favor purchasing.

What about per capita income and present day prices (relative to past prices)?  Presently, U.S. per capita income is on the rise again and has regained to the level of 2007 (roughly $40,000 per person), while prices of homes on the other hand rest at 2002 levels according to the Case-Shiller Home Price Index.  What about mortgages rates?  Presently, 30-year fixed rates are at near record low levels.

So, let’s put this all together.  Housing is presently more affordable than at any time in the last 30 years.  While income is only at 2007 levels, home prices are even lower coming in at 2002 levels.  All of these factors set the stage for many individuals to favor purchasing over renting.  Thus, while there are grave concerns over the overall health of the economy, fundamental drivers now appear in place to staunch any further significant plunges in home prices. 

The ship appears to be turning.[3]

Endnote

[1] See http://money.cnn.com/2011/10/31/real_estate/home_prices/

[2] Beracha and Johnson (2011) on going research.

[3] This conclusion obviously assumes nothing unprecedented and catastrophic occurs such as the removal of the home interest deduction to combat the national debt or the often predicted foreclosure tsunami actually finally occurs.

Monday, November 7, 2011

Homeownership: Still The American Dream!

Homeownership: Reports of Its Death are Exaggerated



There have been a growing number of reports announcing the death of American homeownership over the last two years. Some have said we are evolving into a rental society and even challenge the long standing belief that homeownership should be a part of the American Dream. They look at the falling rate of homeownership as proof of their point. Others say that the younger generations no longer see the value in owning over renting.

However, this past week, two news items might refute these points. First, DSNews reported the homeownership rate actually increased in the last quarter; the first quarterly increase in two years.
“After falling to a 13-year low during the second quarter, the homeownership rate posted a highly unexpected rise in the third quarter, according to a Census Bureau report.”
Then, Fannie Mae released their 2011 3rd Quarter National Housing Survey. We will cover this report in more detail on Wednesday. But we do want to mention a few findings the report highlighted. Both Generation Y (birth date mid-1970s to mid 1990s) and Generation X (birth date mid 1960s to mid 1970s) have stronger beliefs in the importance of homeownership than those of the general population.

Here are the numbers for the three major reasons to buy (as per the survey) with the percentage who believe in each reason:

1. It is a good place to raise children and provide them with a good education:
  • Generation Y: 84%
  • Generation X: 81%
  • General Population: 80%
2. You have a physical structure where you and your family feel safe:
  • Generation Y: 77%
  • Generation X: 79%
  • General Population: 76%
It allows you to have more space for your family:
  • Generation Y: 76%
  • Generation X: 77%
  • General Population: 73%
Both generations also believe in homeownership as an investment. 70% of Generation Y and 66% of Generation X see homeownership as a safe investment while 64% of the general population believes so.

Bottom Line

This country’s belief in homeownership is anything but dead. The younger generations have the same if not a higher level of belief than earlier generations. As the economy improves, more people will make the move into a home of their own.

Friday, October 28, 2011

Underwater Refinance Program Expanded

by DEAN HARTMAN on OCTOBER 27, 2011

At a campaign stop in Nevada on Monday, President Obama announced an expansion of the HARP (Home Affordable Refinance Program) which would eliminate the current maximum LTV of 125%. The initiative is being looked at as a way to reward those homeowners who have been good payers of their mortgages but, because of declining home values, they could not take advantage of today’s lower interest rates.

While the actual details on the program will not be released until next month, here’s the buzz:


It will only pertain to loans currently being serviced by Fannie Mae or Freddie Mac
Because of the removal of the LTV cap, appraisals may not be required
With the only qualifying criteria announced being that the last six payments be on time, it is possible that income documentation may be streamlined and credit scores might be more forgiving
Fees allegedly will be reduced
Incentives may be offered to people who shorten their repayment time
It also sounds that the banks may be given some incentive by not holding them liable for the underwater portion of the new loan (a major incentive for sure).
The government is on the hook for these loans already. By lowering the payments (by offering lower rates), they will likely help these loans to continue to perform and make it less likely for the underwater homeowner to walk away.

The original HARP was expected to help 5 million families.  After two years, it has yet to reach 900,000; therefore, estimates ranging from 800,000 to 1.6 million borrowers who may benefit need to be taken with a grain of salt.

Whether the Administration is looking for purely political rhetoric points or not, my advice to underwater homeowners is too keep an eye out for the final guidelines because you just might be able to lower your payments.

Thursday, October 27, 2011

Will The 30 Year Mortgage Disappear?

Will the 30 Year Mortgage Disappear?
by THE KCM CREW on OCTOBER 26, 2011


The federal government is reconsidering their involvement in the home mortgage process. They plan to still ‘guarantee’ certain mortgages. However, they appear to be redefining what they consider a ‘qualified purchaser’. They are discussing stricter lending guidelines in four different areas:

The type of mortgage
The minimum down payment
The debt ratios of the buyer
The FICO score of the purchaser
Today, we want to look at #1.

It appears that there is at least conversation about eliminating the 30 year fixed rate mortgage which has been a staple in this country’s housing industry for some time. Some in government want to duplicate the mortgage process of other countries. In Canada, for example, they don’t even have 30 year fix rate mortgages available. The vast majority of Canadian home loans have a 25 year payout but the interest rate is renegotiated every five years. If rates go down, you will wind up with a lower rate. If rates go up, you end up paying a higher rate. If you want a fixed rate mortgage for 25 years you pay a rate approximately two percentage points higher than the going rate at the time of your closing.

Would the same happen in this country? Last week, Housing Wire quoted Janis Bowdler, senior policy analyst at the National Council of La Raza:

“Without some form of Fannie Mae and Freddie Mac, replacements to support these popular loans, many first time borrowers will be shut out.

“Without that guarantee lenders would not offer 30-year fixed-rate mortgages, at least not at rates the average person could afford. Yes, some would be available but not for the average family but for those with a large amount of inherited wealth they can put to a large down payment.”

Why Is This Important?

You probably want to set your housing expense at the lowest number possible for the longest time possible. This may be the appropriate time to lock-in your long term housing expense as three things seem possible, if not likely, in the future:

Mortgage rates will increase from current historic lows
The 30 year fixed rate mortgage may disappear
Rents will return to historic norms of 3% annual increases 
Bottom Line

If you want to purchase a home of your own but are waiting to see where prices will go, consider what you could be giving up while you wait.

Thursday, October 20, 2011

5 Tips to Prepare Your Home to Sell

With all the negative press coverage and constant onslaught of challenges facing Sellers, it's easy to lose sight of a critically important truth. Your home is in direct competition with other homes in your neighborhood. Preparing the home and making sure it looks as nice, clean and in good repair as possible will increase the chances of a buyer considering it over the others. A good frame of reference for a buyer showing is a job interview. You want to be well prepared and looking your best. Here are five tips to help give you the competitive edge.


5 Tips to Prepare Your Home for Sale

By: G. M. Filisko

Published: February 10, 2010

Working to get your home ship-shape for showings will increase its value and shorten your sales time.

1. Have a home inspection
Be proactive by arranging for a pre-sale home inspection. For $250 to $400, an inspector will warn you about troubles that could make potential buyers balk. Make repairs before putting your home on the market. In some states, you may have to disclose what the inspection turns up.

2. Get replacement estimates
If your home inspection uncovers necessary repairs you can’t fund, get estimates for the work. The figures will help buyers determine if they can afford the home and the repairs. Also hunt down warranties, guarantees, and user manuals for your furnace, washer and dryer, dishwasher, and any other items you expect to remain with the house.

3. Make minor repairs
Not every repair costs a bundle. Fix as many small problems—sticky doors, torn screens, cracked caulking, dripping faucets—as you can. These may seem trivial, but they’ll give buyers the impression your house isn’t well maintained.

4. Clear the clutter
Clear your kitchen counters of just about everything. Clean your closets by packing up little-used items like out-of-season clothes and old toys. Install closet organizers to maximize space. Put at least one-third of your furniture in storage, especially large pieces, such as entertainment centers and big televisions. Pack up family photos, knickknacks, and wall hangings to depersonalize your home. Store the items you’ve packed offsite or in boxes neatly arranged in your garage or basement.

5. Do a thorough cleaning
A clean house makes a strong first impression that your home has been well cared for. If you can afford it, consider hiring a cleaning service.

If not, wash windows and leave them open to air out your rooms. Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Wash light fixtures and baseboards, mop and wax floors, and give your stove and refrigerator a thorough once-over.

Pay attention to details, too. Wash fingerprints from light switch plates, clean inside the cabinets, and polish doorknobs. Don’t forget to clean your garage, too.

More from HouseLogic
Develop a Landscape Plan to Fit Your Budget

Spring Cleaning Guide

G.M. Filisko is an attorney and award-winning writer who has found happiness in a Chicago brownstone with the best curb appeal on the block. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Friday, October 14, 2011

Coconut Grove Real Estate Market Snapshot - October 14, 2011

Notice to Buyers and Sellers

Real estate is a local business.  National, regional, state, county, municipal and even district statistics are largely inconclusive when it comes to buying or selling your home.  Homes are all about communities.  Sales activity in one community may differ dramatically from one community to the next for any number reasons (school districts, deed restrictions, predominant style of homes, lifestyle preferences, etc.). 
In addition to location, when people are looking to buy a home, they generally look within a certain property type (Single Family, Condo  or Townhouse).  Sales activity from one property type to another within a given community also performs differently.

Also, most buyers are limited by budget with respect to the home they may want to buy. Sales activity is predicated based on the various price segments of homes within them.

The following spreadsheet is a snapshot of the Coconut Grove market taken today.  The market is fluid, so the numbers will change from day to day.  However, like the balance sheet of a company, a market snapshot is a reflection of the strength of a given community's housing market. 

The national media depicts the country's housing market to be in dire straits, and in countless markets across the country this is irrefutable.  As you will see, however, Coconut Grove is not among them. 

In fact, only condos priced over $2M (of which there are only three available at the moment) have seen no sales activity in terms of closing or pended sales in the last 30 days.  Every other sub-segment has had movement.  Luxury single family homes listed over $2 Million have the highest inventory number with 16 months.  It is generally accepted that a healthy real estate market contains six months of available inventory or less. Every other other market segment is either on its way to falling below 6 months or already well below it.

While the media unleashes its daily dose of bad news with respect to real estate, it is critical to remember that it does represent markets at the local level, which is where it really counts.

Also, I have included the number of short sales and foreclosure across the same price segments to provide further insight as to the overall health of the market.  In some markets across South Florida, distress sales make up more than 60% of the total market.  In Coconut Grove, this is far from the case.

If you are a buyer or a seller, this is critical information that should play an important role in your buying or selling decisions.  An experienced and qualified Realtor is your best source of information and guidance.



Thursday, October 13, 2011

Homeownership Under Fire!

This Time We Are Sounding the Alarms

by Steve Harney on October 12, 2011 ·


Occasionally, Steve Harney, our founder and lead content creator, asks us permission to share his personal feelings on a current real estate issue. Today is one of those times. – The KCM Crew



One of the things I often hear from people I meet is that real estate and mortgage professionals should have seen the current housing crisis coming and done something to prevent it. We should have realized that easing lending practices would lead to millions of families buying a home they could never afford. We should have warned our neighbors not to use their homes as ATMs. We should have realized that the economy could never withstand such growth and was about to crash.

Maybe these people are correct. Looking back, perhaps we could have been better stewards of the home buying process. We are committed to not making that same mistake again. Now, if we see a possible challenge in the future, we will speak up. That is what caused the writing of this blog post.

WE MUST SOUND THE ALARMS!

ALARM: Homeownership Percentage Has Dropped Dramatically!!

MSNBC.com, in an article entitled Housing Bust Worst Since Great Depression reported:
“The analysis by the Census Bureau found the homeownership rate fell to 65.1 percent last year… analysts say the U.S. may never return to its mid-decade housing boom peak in which nearly 70 percent of occupied households were owned by their residents.”

ALARM: People Are Losing Hope in the American Dream

In the same article, Patrick Newport, economist with IHS Global Insight is quoted saying:
“The changes now taking place are mind-boggling: the housing market has completely crashed and attitudes toward housing are shifting from owning to renting. While 10 years ago owning a home was the American Dream, I’m not sure a lot of people still think that way.”

ALARM: The Safety and Well Being of the Family Being Sacrificed

If we look at Fannie Mae’s quarterly National Home Survey, as far back as we can go, the top four reasons for buying a home are the same. The top four reasons people buy a home are:
  1. It means having a good place to raise children and provide them with a good education
  2. To have a physical structure where their family feels safe
  3. It allows for more space for their family
  4. It gives them control over what they do with their living space including renovations and updates.
Are children no longer important? Is safety less of a consideration today? Is the pride of homeownership soon to be forgotten? We must look at the long range consequences of being a renters’ society.

ALARM: Building Family Wealth Being Threatened

Let’s look at homeownership as an investment. The Federal Reserve does a survey every 3 years. In 1998 the average Homeowner’s net worth exceeded that of renters by 31 times. In 2001 it was 36 times and eventually in 2007 it was all the way up to 46 times that of renters. Now, homeownership isn’t about a guaranteed financial short-term return – the market goes up, down and back up again. We have to be prepared for the long-term and a key component to wealth is homeownership. Even in these toughest of times, the wealth of the homeowner is over 30 times that of renters.

At a time when we are discussing the gap in wealth between the top 1% and the other 99%, how does the less fortunate paying rent to pay off the mortgages of the more fortunate make any sense?

Bottom Line

Homeownership is important to the American family. If we lose this as a basic concept, what else do we lose? We didn’t realize the consequences when it was too easy to buy a house a few years ago and we are paying a price for that. We will pay an even larger price if we don’t realize the consequences of it being much too difficult for many to own a home today. SOUND THE ALARMS!

A Follow-up To Yesterday’s Blog

by The KCM Crew on October 13, 2011
Yesterday, Steve Harney expressed his thoughts on how homeownership is being impacted in this country. Some believed that Steve thought the American people where losing faith in the importance of owning a home. That is not the case. He just worries about how housing policies may impact our neighbors and our neighborhoods. Here is a blog we posted earlier this year on the issue. – The KCM Crew

Redistributing Wealth to the RICH?


Many people are placing the concept of homeownership under attack. There is more and more debate whether we should limit government assistance to homeowners. The administration just came out with their Reforming America’s Housing Finance Market: A Report to Congress. The report acknowledges the advantages of homeownership:
“…which has helped millions of middle class families build wealth and achieve the American Dream.”
The paper also talks about curtailing a century of government assistance for American homeownership (ex. the elimination of Fannie Mae and Freddie Mac):
“But our plan also dramatically transforms the role of government in the housing market. In the past, the government’s financial and tax policies encouraged housing purchases and real estate investment over other sectors of our economy, and ultimately left taxpayers responsible for much of the risk incurred by a poorly supervised housing finance market.
Going forward, the government’s primary role should be limited to robust oversight and consumer protection, targeted assistance for low- and moderate-income homeowners and renters.”
At the same time it speaks of increasing its support for rental housing:
“The Administration believes that we must continue to take the necessary steps to ensure that Americans have access to an adequate range of affordable housing options. This does not mean all Americans should become homeowners … we should ensure that there are a range of affordable options for the 100 million Americans who rent, whether they do so by choice or necessity.”
In a press release announcing the administration’s points, Housing and Urban Development Secretary Shaun Donovan is quoted:
“We must continue to take the necessary steps to ensure that Americans have access to quality housing they can afford. This involves rebalancing our housing priorities to support a range of affordable options, from promoting much-needed financing for quality, affordable rental homes to ensuring the availability of safe, and sustainable mortgage products for current and future homeowners.”
This is not just a matter of semantics. In his prepared testimony before the House Committee on Financial Services, Treasury Secretary Timothy Geithner said:
Our goal is not for every American to become a homeowner.”
The administration is taking a strong stance against government’s role in supporting homeownership. This would be a major change in policy. Assistance for homeownership has been important to America for a century. Many young people were able to attend college because their parents were willing and able to refinance their home to pay the tuition. Many American business owners got their start-up capital by taking an equity loan on their house. Renters won’t be able to ask their landlords to help pay their child’s college tuition. Renters can’t expect landlords to finance the development of the new product they discovered.
If we start to create a land with greater numbers of renters, those able to still purchase property will get wealthier collecting the rents from those who can no longer attain the American Dream. The administration calls for more support for these developers:
“The Administration will explore ways to provide greater support for rental housing. One option would be to do so by expanding FHA’s capacity to support lending to the multifamily market.”
This will lead to the redistribution of wealth in this country with the owners of the rental units building family wealth with profits generated by this real estate.
Diana Olick in an article for CNBC Realty Check quotes Democrat Melvin Watt of North Carolina:
“…there’s not going to be any home ownership at the low income level…Rich people will have home ownership and rich people will make money on apartment rentals, but we’ll be a renter nation for low-income people.”
We have to make sure this is the America we want.

 

Monday, October 10, 2011

Experience, Education, or Both?

Education, Experience, or Both?
by Ken H. Johnson on October 10, 2011 · 0 comments

Today, we are again honored to have Ken H. Johnson, Ph.D. — Florida International University (FIU) and Editor of the Journal of Housing Research as our guest blogger. To view other research from FIU, visit http://realestate.fiu.edu/. - The KCM Crew

The Research

What role does education play in producing a successful real estate agent? This question has been debated for years. However, there has been very little scientific investigation to this point into the role of education and its influence on success in the industry. Anderson, Johnson and Jordan[1] are presently investigating this link, and though the results are preliminary, their findings strongly suggest that having an undergraduate college degree increases the likelihood of an agent being successful between 40% and 160%.


In its most basic form, the research’s statistical model defines success as an agent that produces more closed volume than 50% of all other brokers. The role of a college degree increases even more dramatically, when success is defined as an agent that produces more closed volume than all but 5% of all other brokers.

Implications for Practice

The result from Anderson, Johnson and Jordan clearly indicates that having an undergraduate college degree goes a long way towards creating a successful agent. The role of education, however, does not rule out or substitute for experience. From a personal perspective, experience wins out over education when the two are pitted against one another. On the other hand, combining experience with education produces the most capable agent — an agent who brings both their wealth of experience and the analytical ability to deal with new issues as they arise in the selling process.

Today, agents no longer have to choose between experience and education. There are now a number of alternatives ranging from local colleges and universities that offer real estate programs and degrees to Realtor® University, which is presently developing a real estate curriculum, among other alternatives. As a testimonial, I most strongly recommend higher education. While still in full-time practice, I obtained an M.B.A. (concentrating in Finance). After I graduated, my business volume jumped dramatically and a world of additional opportunities opened up for me.

Thursday, October 6, 2011

Tips to Present a Stronger Mortgage Application

Tips To Present a Stronger Mortgage Application

by Dean Hartman on October 6, 2011 ·

As underwriting guidelines for lenders become more stringent, we need to re-examine what a good mortgage application looks like. As home buyers begin their search for a home, there are a few items they should be aware of that they can do to help get their loans approved (with the best possible terms), and, at the same time, lessen some of the stress that goes along with the mortgage process.

1. Income documents

Most lenders want to see a full month of paystubs and two years’ complete Federal Tax Returns. Assembling them ahead of time and holding on to every paystub you get is a good idea even before you find a home and/or submit your mortgage application because it will save you time later. Moreover, looking at those documents and being prepared to explain any deductions that show up is crucial. Child support, alimony, garnishments, and Unreimbursed Employee Expenses are often crippling factors that, if explained and dealt with upfront, can make your loan approval smoother.

2. Asset documents

Most lenders will scour your bank accounts for the two months prior to going to contract. They are looking for large deposits because large deposits can signal a new loan that wouldn’t show up on your credit report yet. What’s a “large deposit”? Typically, any deposit that would represent more than your income can support. If you make $5000 a month, after taxes you likely net $3800 (or $1900 a bi-weekly pay period). Therefore, deposits in excess of that will need to be explained and documented. Sold a motorcycle? Have a paid receipt and motor vehicle documents in place. Received a gift? You will need a Gift Affidavit, proof of the donor’s ability and transfer of the funds. Any and all questions should be discussed with your loan officer.

3. Credit Score Optimization

Do your best to curtail your use of credit as it relates to your available credit lines. Target a cap of 30% of usage of available lines to get the best scores. Do NOT cancel credit cards. That will lower your amount of available credit, thereby raising your percentage of usage. That will damage your score. Do NOT shop for a car, explore life insurance, apply for a new credit card or increase the limits on your current cards because the running of your credit by people in other industries will also lower your credit score. Most importantly, don’t do anything that will require having your credit run without first discussing it with a mortgage professional who knows the impact it could have.

4. Appraisal Concerns

It’s unlikely you will make an offer to purchase without checking out comparable home sales. It’s also likely you received that type of data from the real estate agent you are working with. Make sure your agent prepares the same information for the appraiser. Data about similar sales, similar homes currently on the market and maybe even cost estimates for any repairs or improvements anticipated can preempt future problems with appraised values and conditions.
Overall, it is recommended that you hold onto copies of everything financial, think before allowing your credit to be run and work with an agent and loan officer who can use their experience to put your loan application in its best possible light…as soon as you start thinking about buying a home.

Wednesday, October 5, 2011

Picking the Right Agent

Picking the Right Agent is Crucial

by The KCM Crew on October 5, 2011


The National Association of Realtors (NAR) released their Existing Sales Report two weeks ago and in the report they discussed a troubling trend: cancelled contracts are increasing dramatically. NAR defined the issue:
“Contract failures – cancellations caused largely by declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price.”
NAR explained that 18% of all contracts were cancelled in August. This compares to 16% last month and 9% in August of 2011.

The percentage of cancelled contracts has doubled in the past year!!

It is extremely important that both buyers and sellers pick the right real estate professional to assist them with their real estate needs.

BUYERS

Make sure your agent can not only help you find the home of your dreams but also find you professional assistance with all aspects of the transaction (mortgaging, title, etc.)

SELLERS

Realize that your agent must sell the home twice:
  1. to a qualified buyer
  2. to the bank (through the appraiser).

The second sale may be more difficult in this market than the first.

Bottom Line

It is imperative in this housing market that both buyers and sellers use a true real estate professional to guarantee that the deal will actually reach the closing table.

Tuesday, October 4, 2011

The Modern Day Conundrum: Short Sale vs. Foreclosure

Short Sale vs. Foreclosure: A Short Sale Always Wins

by Christopher Reale on October 4, 2011



Today’s ever changing real estate industry has brought upon some very challenging questions from our clients. We as counselors, want to put forth the best, non-emotional advice that we can, in hopes that we can help our clients and their families navigate the rough waters of the short sale process.
The most prevalent question and one that continues to permeate the industry is:
“Why should a seller go through the short sale process rather than letting their house be foreclosed upon?”
While we cannot speak to every client circumstance, we can say one thing with complete conviction. In almost all instances in which a potential seller is contemplating whether they should short sell their house or let it go through the foreclosure process, a short sale is the better option. The following are examples to consider:

Example A- Short Sale

Mr. Smith owns a home in which he has a mortgage balance of $220,000 and a current market value of $150,000. Mr. Smith has elected to short sell his property. His Realtor successfully obtains a buyer who puts forth an offer price of $120,000 (80% current market value according to Realty Trac Foreclosure Report 5/26/2011). After reviewing the buyers offer and the financial hardship information from Mr. Smith, Mr Smith’s bank agrees to accept the short payoff of $120,000 which would leave a deficiency balance of $100,000.
The transaction closes and is final. Mr. Smith then pulls his credit report 30 days after the transaction takes place. On the report he notices that the mortgage trade line states “Mortgage debt was settled for less than full” and the balance on the mortgage is $0. Mr. Smith is now on the road to financial recovery.

Example B- Foreclosure

For the ease of illustration we will use the same value and mortgage debt amounts as in Example A. However, Mr. Smith has elected to forgo the short sale process and let the bank foreclose on the property. The bank holding his mortgage facilitates the proper legal procedures to foreclose on the property, all of which are costly. Mr. Smith is notified and his property foreclosed upon of which is taken back by the bank to sell as an REO.
Six months later, the bank finally sells Mr. Smith’s home only they sell it for $90,000 (60% of current market value according to Realty Trac Foreclosure report dated 5/26/2011). Remember, as a short sale, the home would have sold for $120,000 keeping the deficiency to $100,000. In addition to the deficiency now being $130,000, the bank has elected to add on legal costs of $15,000 and asset preservation costs of another $5000 for a total deficiency liability of $150,000. Mr. Smith pulls his credit report 30 days after being notified that the bank has sold his property and of his liability.
On the report he notices that the mortgage trade line states “Foreclosure” and the balance is $150,000. Because of Mr Smith’s choice to choose foreclosure vs. short sale his road to financial recovery has taken a major detour. He not only has a foreclosure on his credit report but know has a much larger deficiency balance in which the bank, in most cases, will report on his credit report as a balance owed.

The Best Option is clear

While the financial and credit advantages are clear when choosing a short sale over a foreclosure, other advantages are sometimes overlooked. The most important of all of them is maintaining the seller’s dignity and peace of mind. We have heard too many stories of families having to leave their homes because of a Sheriffs order or some other type of legal action. The short sale process alleviates this negative social impact. The process puts the control back in the seller’s hands so that they can get back on the road to financial recovery and start providing for their families. In the battle of the two evils, a short sale always wins!!!

Friday, September 30, 2011

Previews International - #1 in Miami Luxury Homes Sold

Luxury Homes are Hot Along
The American Riviera
The national media would have you think that the luxury real estate market in America has gone cold. The reality would indicate otherwise. As far as Miami is concerned, cold must stand for Cold Hard Cash!

Ironically back in 1933, when the country was in the throes of the greatest economic catastrophe in our nation’s history, a young entrepreneur by the name Henderson Talbot had an idea. He identified the need for owners of high luxury homes throughout the country to promote their exquisite properties to buyers throughout the world. Prior to this, there was no specific resource for high end residential real estate sales. He seized upon the opportunity and traveled the country, developing the first strategic marketing platform for high end homes the world had ever seen. He would take numerous photographs of the homes with his 16mm camera and together with captivating and detailed descriptions of the homes, Mr. Talbot revolutionized an industry. He called the program Previews:



Today as back then, the Coldwell Banker Previews International name continues as the preeminent leader and benchmark for high luxury homes in America, and has transcended international borders to feature the most exquisite homes all over the world. Ironically as in the dawn of its origins, the need is just as great for exceptional properties to be featured and represented in ways befitting their status and by professionals that are equally suited to the task.

In Miami, the Coldwell Banker Previews International name features prominently throughout the luxury landscape. Here are some revealing numbers for homes offered at $1,000,000 or more to support this claim:

Available Homes - $1M+       =   970
$1M+ Homes Sold or Placed under Contract-Last 30 Days        = 136
Number of Months Inventory = 7.13
Closed Sales ($1M+) in Last 30 Days = 39
Closed Sales ($1M+)–Coldwell Banker Previews Intl= 10 (26%)

*as per Southeast Florida Multiple Listing Service

One in Four $1M+ Miami Homes Sold
Represented by
Coldwell Banker Previews International

Of the thousands of agents and brokerages in the Miami area, Coldwell Banker Previews International stands alone as the standard of excellence and quality performance. With these numbers, would you trust the sale of your most prized possession to anyone else? As a buyer, would you give your confidence to any other organization?

A few Coldwell Banker Previews International
Properties Sold - Last 30 Days


Coconut Grove -3810 Battersea Rd
$1,300,000

1071 San Pedro Ave
$1,375,000
Coral Gables (Cocoplum) - 184 Paloma Dr
$2,300,000

Miami Beach - 1730 W 23 St

$5,600,000
Miami Beach - 68 La Gorce Cr

$6,500,000



Quality-Experience-Resources-Brand Recognition

Industry Leadership –Global Reach

Uncompromising Professionalism

These are the hallmarks of excellence. I am proud to serve my clients among such an exceptional community of professionals. If you are considering the sale or purchase of a home, I am honored to be at your service.